China trade plan wins few friends

FEWER than a quarter of Australian manufacturing companies
support a free trade agreement with China, according a survey by
the Australian Industry Group.

The study of more than 700 companies, with a total turnover of
$24.5 billion, found support had risen from 13 per cent in 2004 to
24 per cent now.

But AiG chief executive Heather Ridout told a conference in
Shenzhen on the proposed FTA that the result underlined "a
substantial degree of ambivalence" that was caused by issues that
must be tackled.

"Australian manufacturers will only support an FTA with China if
it provides tangible benefits to their businesses and their future
prospects," she said, adding that the case for Australian
manufacturing to back an FTA "is still to be demonstrated".

The study found Australian manufacturers were encountering
significant non-tariff barriers in the Chinese market.

Several companies listed one or more issues, including lack of
intellectual property protection, lack of transparency in legal and
financial systems, inconsistent enforcement of import duties,
inconsistent interpretation of provincial laws, different customs
requirements, difficulties with technical standards and
restrictions on foreign investment.

Australian consumer goods companies reported that on average
15-20 per cent of their products on the Chinese market were
counterfeit.

"Many of our members see enforcement of their intellectual
property rights in China as a futile endeavour and intentionally
withhold innovative designs or products from the Chinese market,"
Mrs Ridout said.

She said China's IP enforcement problems were also being
exported. More than one in five companies in the AiG study said
they had experienced IP infringements from Chinese goods in the
Australian market.

"So it is central to the FTA that it delivers substantial
improvements in the protection of IP rights for Australian
companies doing business with and in China," she said.

The AiG believed that any FTA with China must be comprehensive,
covering both tariff and non-tariff issues, and genuinely
liberalising across all sectors of the economies.

The survey showed that, for Australian industry, China was now a
competitor of near-equal importance to domestic competitors. More
than four in 10 companies cited competition from China as an issue
of concern. Forty per cent said China had caused a negative impact
on profits, with the low value of China's currency an important
factor.

■Prime Minister John Howard has seized on the start of
Australia's $25 billion LNG exports to China to warn that
Opposition Leader Kim Beazley's scrapping of Australian Workplace
Agreements would be "a dagger at the throat" of the resource
sector.

He called a brief news conference before his meeting with
Chinese Premier Wen to re-enter the industrial relations debate. He
had just come from a ceremony marking the arrival of the first
shipment of LNG from the North-West Shelf to Dapeng's purpose-built
terminal, China's first LNG project.

Mr Howard said the LNG sales represented huge potential for
Australia's economic future. "I asked the rhetorical question: Why
put this at risk?" He said 43 per cent of all workers in the West
Australian resource sector were employed under AWAs.

"If AWAs are swept away, it will affect the competitiveness of
the greatest export industry this country has."

Mr Howard said there had been a sharp drop in the number of
working days lost in the WA resource sector since AWAs were adopted
in 1996.

"Labor and the unions' industrial relations changes are a dagger
at the throat of the successful resource sector in this country,"
he said.